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Generative AI and Firm Values
(with Andrea Eisfeldt, Gregor Schubert, and Bledi Taska)
Journal of Finance, revise and resubmit
WSJ | Bloomberg | VoxEU | Barron's (Frontpage Coverage) | Financial Times | Marginal REVOLUTION
*Best Paper Award at the TCU Finance Conference
How do recent advances in Generative AI affect firm value? We construct the first measure of firms' workforce exposure to Generative AI, and show that an Artificial-Minus-Human (AMH) strategy earned 5% returns in the two weeks following the ChatGPT release. This effect is more pronounced for firms with greater data assets and is distinct from firms' product exposure. We highlight that high-exposure workforce can be either substituted or complemented by technology depending on whether their core or supplemental tasks are exposed. Examining firms' labor demand and profitability post-ChatGPT supports the labor-technology substitution channel.

Talent Market Competition and Firm Growth
(with AJ Chen and Zhao Zhang)
Journal of Finance, reject and resubmit
Slides
How to measure the intensity of talent market competition and how does the competition affect firm growth? This research constructs a new measure of firms' talent retention pressure based on other firms' job postings for talent in the local market. We show that talent market competition substantially dampens firms' capital investment. The effect is primarily on laggard firms' investment but not superstars', leading to a limited impact on aggregate U.S. investment but increased industry concentration.

Institutional Participation in Information Production and Anomaly Returns
(with AJ Chen and Gerard Hoberg)
Journal of Accounting Research, revise and resubmit
Dow Jones Investor Attention Panel
18% of WSJ articles mentioned the predictions of institutional investors. This research constructs a new measure of revealed institutional information in financial media using over one million WSJ articles. We show that revealed institutional information stimulates more production of fundamental information via downloads of SEC filings, increases institutional trading on anomalies, and substantially boosts the future anomaly returns, e.g., raising value and momentum returns by 34% to 62%.

The Cost of Regulatory Compliance in the United States
(with Francesco Trebbi and Michael Simkovic)
Review of Financial Studies, revise and resubmit
My NBER CF Slides | NBER Digest | The Regulatory Review | Fortune | Cato Institute | SLUB | Starling Insights | Marginal REVOLUTION
This research quantifies a firm's compliance costs as its wage bill attributable to employees engaged in regulatory compliance tasks using comprehensive establishment-level occupational microdata. Regulatory compliance costs account for 1.34% to 3.33% of a firm's wage bill and total up to $239 billion. Our findings reveal an inverted-U relation between firms' regulatory compliance costs and their scale of employment with firms of 500 employees paying 40 percent higher percentage regulatory compliance costs than small or large firms. The inverted-U shape is mostly driven by heterogeneous regulatory requirements instead of heterogeneous enforcement.

Measuring the Costs and Benefits of Regulation
(with Matilde Bombardini and Francesco Trebbi)
Prepared for Volume 17 (2025) of the Annual Review of Economics

Under the Hood of Routine Share Decline
(with Nir Jaimovich and Nicolas Vincent)
Economics Letters, 2024, 234(111437)
Using the BLS establishment-occupation microdata, this research shows that the decline in the share of routine-task labor in the U.S. economy is entirely driven by incumbent establishments instead of entrants, casting doubts on the creative destruction mechanism for recent automation.